Prime Minister Shehbaz Sharif is set to implement a significant reduction in electricity tariffs, cutting rates by Rs. 8 per unit starting April 1, 2025, following approval from the International Monetary Fund (IMF). This move is expected to provide much-needed financial relief to consumers, who will begin to see lower electricity bills in May.
Out of the total Rs. 8 per unit reduction, Rs. 4.73 per unit will be a permanent adjustment, stemming from key structural changes in the power sector. These include the termination of agreements with six Independent Power Producers (IPPs), a shift in power purchase agreements (PPAs) for 16 IPPs to a take-and-pay model, and the delinking of bagasse power plants from the US dollar to the Pakistani rupee. Additionally, the Return on Equity (RoE) for government power plants (GPPs) has been revised to 13 percent, with the US dollar exchange rate fixed at Rs. 168.
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Officials have confirmed that the tariff reduction will factor in the government’s decision not to lower petroleum product prices, despite a decline in international rates since March 16, 2025. The estimated financial impact of maintaining petroleum prices is projected at Rs. 168 billion, contributing to a Rs. 1.30 per unit reduction in power tariffs. However, this relief will last only one month.
The IMF has endorsed the government’s plan, recognizing that keeping petroleum prices unchanged for three months could cost up to Rs. 250 billion if global prices continue to decline. Meanwhile, the Finance and Power Divisions are actively exploring additional measures to cut electricity rates by another Rs. 2 per unit, aiming to make Rs. 6 out of the total Rs. 8 per unit reduction a permanent adjustment.
In another major decision, the government has confirmed the removal of the Rs. 35 PTV fee from electricity bills, effective July 2025. Instead, the upcoming FY2026 budget will allocate funds to keep the Pakistan Television Corporation (PTV) operational.
This historic reduction in power tariffs is set to provide significant economic relief for businesses and households, aligning with the government’s commitment to stabilizing energy costs and improving affordability.
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